Why calling a media agency a ‘consultancy’ won’t fool anyone
With management consultancies increasingly threatening the traditional media agency model, some companies have taken to renaming themselves, but the issue runs much deeper than simply what you call yourself argues Nico Neumann.
Over the past few years, we have read much about management consultancies taking over business from media agencies. Perhaps inspired by this trend, I noticed that several media agencies now refer to themselves as ‘management consultants’ or a ‘marketing consultancy’.
This begs the question: Can a media agent really be a consultant? And what differentiates an agency from a consultancy?
“A rose by any other name would smell as sweet”
Romeo and Juliet – William Shakespeare
While in our modern business world frontiers can become blurry, there are unique characteristics that help determine whether you are dealing with an agency or consultancy.
The basic roles – Agents v Consultants
Agents typically act legally on behalf of clients and receive a commission (e.g. for buying media). However, consultants traditionally are paid a fixed fee and hired to solve a problem. Their solution should be independent of any outcome. Clearly, conflicts of interests arise if someone tries to be both agent and consultant.
Ask yourself: when was the last time you have been recommended by your ‘adviser’ to spend less money on a media channel that was owned or managed by their affiliated group or partners? True consultants will try to save you money, while agents often may want you to spend more on advertising (“Your sales are low, you need to advertise more”). The more you buy through an agency, the more they tend to earn thanks to volume-driven incentives, such as CPMs or other spend percentages.
Client management and mission
Media agencies use account managers who interact regularly with clients’ marketing and media managers. These main sources of contact are often at the mid-tier management level once an agency has been appointed by senior executives. The account managers’ mission is to make these client managers happy no matter what (the answer tends to be ‘yes’ to every request). Eventually, the agency’s goal is to retain an account and the corresponding billings at almost any expense.
Classical management consultancies work differently. They are hired by a top-level executive to iron out a particular issue and may not always be welcomed among more junior managers (“Why were they brought in? Can’t we solve this on our own?”). However, consultants can more easily suggest unpleasant adjustments (cutting costs, laying off staff), because they have the CEO’s back and were hired for a clean-up in the first place.
Work style and culture
Consultants usually have a serious image and presentation style (wearing suits) and focus strongly on performance, often even with payments linked to outcomes. Therefore, it’s critical as a management consultant to work in a highly structured and organised manner.
In contrast, most media agencies still have very little planning and stringent work methods in place.
Let’s be honest: how many Excel templates for media plans have you seen from the same agency? Even asking for consistent naming conventions can pose a struggle to many traditional agency folks.
In a world of Don Drapers, too much structure and seriousness is seen as an obstacle to creativity. ‘Perceived’ value, telling a great story (even if not true) and big ideas have much more weight than being focused on operational efficiency and improvements.
Talent and skills
It’s not a secret that consultancies only hire the very best graduates and also offer higher salaries to attract talent. Consulting firms have a very tough and lengthy recruiting process in which applicants must solve math tests, brain teasers and case studies.
Don’t get me wrong – getting a job at a major agency will not be easy either and can be paid well. Yet, well-known management consultancies just play in a different league when it comes to the skill set they demand for employment and ongoing careers.
Tech and data experience
Agencies and consultancies also vary in their experience with integrating new technology. While some agencies have built up capacities revolving around tech, analytics and data in recent years, many consulting houses have two or three decades of experience in implementing enterprise, analytics and IT solutions.
In addition, the diverse legacy cultures and mindsets help consultancies and agencies cope differently with the new era of tech and data in media. Working in a structured, transparent manner with performance focus matches a data-science paradigm much better than a free-spirit philosophy concentrating on creating ‘magic’ (note that magic is not real and works based on illusion).
Overall, we can see that management consultancies and media agencies, in particular those from big holding groups, have different goals, histories and underlying business models.
Having said this, it will also be interesting to see whether consultancies can venture successfully into the creative space. Will consultancies’ legacy and work style provide an advantage or burden here? And could too many media acquisitions jeopardise the neutrality that consultants enjoy as advisers?
Only time can tell which business models are sustainable in advertising. But at least presently it seems that media agencies are the ones that have to do some hard thinking regarding their future positioning. Just renaming a broken concept and trying to benefit from the popularity of others will not suffice to thrive, or even survive.
Nico Neumann is a senior research analyst at the University of South Australia
What a load of Bollocks!
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Generally speaking, most consultancy work I’ve ever seen is basically hugely expensive bullshit that hinders the work of every other stakeholder.
Perhaps some are much better than that, but I would hazard a guess that 7 or 8 times out of 10, advertising, marketing and media agencies could give equal or better advice for way less cost.
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That’s a bit loose Nico – it’s precisely because we don’t do the things you have described as a ‘media agency’, that we now describe ourselves as a consultancy.
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Looks like we may have had 3 comments from people working with agencies.
Loosely I agree with the sentiments of this article around the difference between Consultants and Agents, however do think that this opens a conversation about wider issues.
Having the world consultant in your job title is incredibly appealing to a high number of people, reality is only a small percentage provide value to offset the price they charge.
There are traditionally 3 types of consultants:
1) Born consultants: those who have come straight from commerce and business degrees picked up for good money by large companies. They lack real work expertise and are driven by theory and books. Effectiveness can be questioned in terms of suitability to solve real business issues.
2) High performers who go consulting: these people have lived and solved through real business issues. Most likely they were a workhorse within their business, humble, quiet and high achievers, many should have been running or leading those businesses. Their lack of desire to conform to politics lead them into a role where they can help businesses improve. Well worth the money but way harder to find.
3) The “I wants”: the people who want it all, they think that they are amazing and they’ve had other fix real business issues for them in the past. They are the talkers who cannot walk, but rely on others to for them and take the credit. What they are yet to learn is that consulting requires accountability, ownership and execution.
Form an agents perspective you are simply acting in the best interests of clients, well that’s the idea. We all know the agency model is under pressure and we are seeing the tension in market between programmatic and managed service arms. There is a genuine reason why transparency is being asked of agents and very soon it’s going to be crunch time for some of those businesses. Their role is to help drive outcomes for clients from marketing activity, whereas that focus seems to be on own margins over and above commissions and feeding partnerships that they have over committed to whether they be media or technology.
I’m for business harnessing the opportunities to monetise as presented by content, coupled with effective use of streamlined technology to help make experiences better for advertisers.
Good article Nico, someone needs to be asking questions which overs avoid.
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Yep.
Only companies like Accenture can be consultants. Or should they go back to calling themselves Arthur Andersen (accountants).
Tosh 1.0.
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This article and the comment above from the insider miss a large part of the point. What good agencies do, and have always done, is provide consulting.
Just because your title says consultant doesn’t make you effective, just like saying ‘creative’ doesn’t make you creative.
When you combine an effective team of advertising, marketing and PR people, you get pretty much all the skills of most consultancies, at a much lower price. The reason the agency model is suffering is because we don’t get to charge ‘consultancy’ level fees, in fact many agencies don’t even get to charge decent agency fees due to that small number of clients who treat creative agencies like sweatshops.
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At the end of the day effective work deserves good money.
Media owners and tech companies drive most of the solutions, when those solutions make it to the client they have an agency logo all over them.
Universal solution? move everything to performance based when it comes to agencies commissions. There are far to many people in this industry not doing enough for far too much money.
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Is this opinion piece based on the dictionary definition of the two words?…. Its bizarre to say the least and misses a myriad of important and highly debatable points.
As a ‘consultancy’ in the modern world you can essentially ‘tap in and tap out’ at the clients need, whim, requirements and budget. This is a cost benefit, not a loss to both parties. As an Agency, lets say on a retainer, then you are still sucking money even when you dont have the right tools or talent to help shape, craft and create the solution they may require. In the modern world we are able to pool talent very easily and feasibly dependant on the project, goals and desired outcomes and requirements of the clients end objectives, why would anyone or any business pay for a talent bank on an on-going basis that is not able to deliver to the needs they have to achieve the goals they are chasing?
This is a strange article to say the least, the tipping point has arrived – why would you continue to pay large sums of money for talent banks that may not always suit your needs?….
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Ah Nico. Was it your aim to rattle the cage Ritson-style? If so, you might have slept through a few too many of his lectures.
“True consultants will try to save you money”.. is a facile statement seemingly from somebody who has never engaged consultants for anything. Consultants provide external, independent advice and expertise on any number of issues facing a business, only one of which may be saving costs. Indeed, a likely outcome from hiring any named management consultancy to grow your business is a massive increase in costs for the consultants’ time and in the implementation of their recommended approach.
“while agents often may want you to spend more on advertising”. It might surprise you to learn that the majority of my clients in agency were on fixed fee retainers. The most likely outcome for the agency of the client increasing their media budget during the contract was longer hours, exhausted planners and strained servicing levels. Also, the vast majority of these clients sought unrealistic brand and sales growth with a lower YOY budget that was already seriously undercooked for their growth expectations. Suggesting they spend an appropriate amount (typically more) was invariably the right advice.
“The account managers’ mission is to make these client managers happy no matter what” Undeniably agencies are under considerable pressure from holding companies to retain and grow business. However, clients do not want sycophants and my genuine experience of working on clients of all shapes and sizes is that they generally respond very well to “no” when it is delivered with smart thinking and clear rationale. But bend over backwards to help a client achieve a KPI or meet an insanely short deadline? Yes… consistently.
“well-known management consultancies just play in a different league when it comes to the skill set they demand for employment and ongoing careers”. By and large this is probably true, but this neither proves consultants are better qualified to plan and buy an advertising campaign, nor that the client is going to accept a sizable multiple on the costs of campaign management. Last time I looked, clients were screwing fees down to pitiful levels.
Your disdain for media agencies is not even thinly veiled in this article, but that’s your opinion and you’re entitled to it. What I do know for a fact is that many honest, smart and hard working folk work in media agencies and there is a great deal more integrity at work there than you will ever know.
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This entire article is based on the very old fashioned notion that agencies get paid via commissions. If this was 1994, you’d be right Nico.
The vast majority of clients pay my media agency a fixed fee for resourcing. So there is no question of ‘favouring’ one channel over another (not that I bought that line anyway pushed by self-interested procurement consultants). We also have part of our fees at risk, so if we dont meet the agreed performance KPIs we dont make our profits on the client.
Contrary to your main point that agencies are self-interested in advising clients to spend more on media, our KPIs are always about how we can save money, not spend more.
So your article, basically, is pants.
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Sad attempt at becoming a player. Fail
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ouch. nico must have hit a soft spot. probably not complete, but nice overview showing why media agencies are crumbling and consultancies stealing their business.
@haha: sounds like you have the characteristics of a consultancy. at the top the article states that the listed points determine whether someone is a consultant or agent. its not determined by the name. thats the whole point of the article
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Thank you Mr Patterson, fluff is the strength of a strategy man
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BS!
I’ve worked with your mob before.
Walks like a media agency, talks like a media agency… Is an agency!
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Mate, you are pants.
I know how agencies work, of course you spin lines line “doing what’s best for the client” but deep down you are going “ok, how can we achieve the soft objectives but also scratch the back of network X to get my trip to the Olympics”.
Hi yoooooooooo.
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Well, “consultancy” never take whole responsibility for your project, because they are only consultant. You are the one who is responsible for realization strategy, not consultant. When you work with agency, they do all work and have to take responsibilities. So you pay money not only for “strategy” made for you by some consultant, but for KPI
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